CIRCULATING C~OPYR s T R I C T E D TO BE RETURNED TO REPORTS DESK R e p o r t N o. T.O 83-b This document was prepared for internal use in the Bank. In making it available to others, the Bank assumes no responsibility to them for the accuracy or completeness of the information contained herein. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROJECT REPORT ON THE REHABILITATION OF THE STATE RAILWAY OF THAILAND July 28, 1955 Department of Technical Operations CURRENCY EQUIVALENTS UNIT BAHT OFFICIAL RATE U.S. $1 Baht 12.5 Baht 1 U.S. $0.08 Baht 1,000,000 U.S. $80,000 FREE MARKET RATE (end of February 1955) U.S. $1 Baht 20.47 Baht I U.S. $0.049 Baht 1,000,00 U.S. $49,000 TABLE OF COiNTEI\TS Page Paragraph I. Introduction 1 1- 3 II. Legal Status of the SRT 1 4- 8 III. The Property a. Roadvway and Track 2 9- 10 b. Locomotives 2 11 -12 c. Freight Cars and Coaches 3 13 - 15 d. Comnunications 3 16 -18 e. Shops 3 19 -20 IV. Administration of the SRT a. Management and Organization 4 21 - 24 b. Accounting 5 25 - 27 c. Personnel 5 28 - 32 V. Railway Operation a. Traffic 6 33 - 40 b. Maintenance 8 41 - 42 c. Tariffs 8 43 - 46 VI. Financial Situation and Record of Earnings 9 47 - 51 VII. Forecast of Traffic and Revenues 10 52 - 57 VIII. The Rehajilitation Program a. Physical Program 12 58 - 65 b. Improvement of Operations 13 66 - 70 IX. rost and Financing of the Program a. Estimnated Cost of the Program 15 71 b. Cash Requirements and Sources 16 72 - 77 c. Items Proposed for Bank Financing 17 78 V. Conclusi)ns and Recommendations 18 79 - 88 *F * * *t * MIap of Thailand Appendix I - General Statistics (1954) It IT - Organization Chart " III - Unaudited Balance Sheet as at 31st December, 1954 IV - Investment Program, 1955-1959 V - Tonnage of Freight Traffic, 1945-1954 -I I - Summary of Forecast on Freight Revenues VII - Statement of Estimated Income Account, Investment and Fixed Charges, 1955-1960 VIII - Statement of SHT CommTitments as of November 30, 1954 PROJECT REPORT ON THE REHABILITATION OF TIDE STATE RAILAAY OF THAILAND I. INTRODUCTION 1. In October 1950 the Bank made a loan of $3 million to the Government of Thailand for the re-equipment of the railway shops and for signaling equipment as a part of a railwray rehabilitation program. In 1953 the Bankm-Lras asked to consider an additional loan for extension of this program. A Bank mission visited Thailand in early 1953 and investigated various aspects of the program. A mission from Thailand came to zashington in September 1953 to continue negotiations but no agreement was reached at that time. In July 1954, the Bank indicated to the Mlinister of Finance, the basis on which it would be pDrepared to resume discussions of the projectt In January 1955, the State Railwvray of Thailand (ShT) submitted a report to the `ank outlining an investment program and indicating its intention to operate the railwray system in accordance with sound technical, financial and manage- ment standards and practices. 2. This analysis is based on field observations supplemented by material submitted by the SRT. The project considered for Bank financing involves a new,T rehabilitation and improvement program which supplements the one started after '* orld j'ar II. The program, to be carried out over a period of five years, is estimated to cost 4l.27 billion, of which the equivalent of 4}h8 million (Xl billion) calculated at Ql = '21 would be spent in f.oreign currency. 3. The resort analyzes the investment program, describes the present condition of the railway and its procedures of operation, accounting, manage- ment and financing, makes recominendations for improvements of all aspects of railwRray administration and indicates the conditions under which a Bank loan in an amount equivalent to about $12 million could be recommended. II. LEGAL STATUS OF TIE SRT 4. The SRT was established as a legal entity by an Act of June 5, 1951. Prior to this date the railways had been run as a department of the Ministry of Communications, from which it i.ras separated in order to provide the bapis for a more efficient and business-like operation conducted vtith a minimum of political interference. 5. Under the Statute wJrhich created it, the SRT has full power to manage and develop the railways. The formulation of policies and supervision of the general affairs of the SRT are vested in a Board of Commissioners appointed by the Council of Ministers. The General Manager, who has direct charge of the operations of the SRT, is appointed by the Board subject to approval of the Council of Ministers. 6. The Statute requires the SRT, in the conduct of its business, to give due regard to the interests of the State and the public. The SRT is specifically required to receive the approval of the Government before con- structing new lines, abandoning existing lines, increasing or decreasing - 2 - capital, selling property, and establishing standard rates for the use of the railwray system. The SRT is required to prepare each year both an operating and a capital budget; the latter must be presented to the Council of Ministers for approval. Revenue remaining after deduction of specified charges and funds required to carry out the approved capital program must be turned o-ver to tlle State. The Statute provides that the Board shall appoint an independent auditor to certify the SR1Ts accounts. 7. The Statute seems to provide a satisfactory framework for the opera- tion of the SRT as an autonomous entity. In fact, however, the SHE depends on government approval for all decisions of importance, and even for decisions affecting some day-to-day operations. This situation, howvever, is less the result of the positive requirements of the Statute than of the general political and administrative environment in Thailand. While that environment remains, changes in the Statute to enhance the independence of the SRT are likely to have little effect. 8. It would be desirable to provide for broader representation in the Board of Commissioners of the many economic interests which make use of the railvay system. Representation of agriculture, industry, commerce and banking could be provided for wiithout any cAange in the existing Statute and would result in a strengthening of the Boardts ability to make sound policy for the railway system. III. THE PROPERTY a. Roadway and Track 9. Tihe roadbed, structures and embankmernts are in good condition, well maintained and the drainage properly taken care of. The 3333 km of meter- gauge track are laid on hardiwood sleepers which have not been treated. Spikes are used rather than screws to attach the rails. 2ith few exceptions, all of the rails are 50-lb rails and are now 35 to 45 years old. The road ballast is adequate in quantity, but is not properly sized. 10. Because the rails are old and are not canted, they are so badly wforn that the wheel flange in some places along the line bears on the fish plates. Rails must be replaced on 2132 km of track. Budgetary provisions have been made for the renewal of 754 km of track wfith 60-lb rails (of which 4h9 km have been laid), leaving a balance of 1378 km of track to be relaid ith heavier 70-lb rails. b. Locomotives 11. As of January 1955, the SRT owned 328 steam. locomotives and 44 diesel-electric locomotives. Eighty steam locomotives and 19 diesels are overage and have to be scrapped as soon as replacements hav&ebeen made. All steam locomotives use wood for fuel. Compared to the diesels, the operation of the steam locomotives is expensive and commercial speeds are very low since the locomotives have to be refueled every 60 to 70 kIs. 12. Locomotives are kept in a perfect state of cleanliness and in good mechanical condition. - 3- c. Freight Cars and Coaches 13. The number of freight cars on the books in January 1955 was 6210, wrhich included 2660 cars delivered since the end of the war. About 600 cars should be scrapped because of overage and poor condition. 14. Passenger coaches in January 1955 totaled 632, of which 569 wlere bogies. MIore than half of the coaches were purchased after the war. About 90 cf thI old coaehes should be scrapped. Because of the great increase in passenger traffic in the past 10 years, the existing fleet cannot cope wTith present requirements. 15. The couplers now in use are of the old "hook and link" type and are not strong enough for the operation of heavy freight trains with the more powerful modern locomotives. Because of weak couplers, freight trains have to be split into sections for steep grades and the result is a drop in opera- ting efficiency. To increase the capacity of the SRT, longer and heavier trains must be operated, requiring the installation of automatic couplers. d. Communications 16. The present methods of communications are inadequate to operate a modern railway. The principal stations are connected to Bangkok by telegraph w,ires, and mTessages to intermediate stations have to be relayed either by telegraph or, over short distances only, by telephone. The train service is controlled by block instruments (token system) Trith some exceptions where the telegraphic train order is still in use. 17. Because of the lack of long distance telephone communications, the dispatching of trains cannot be centralized in Bangkok as it should be. The station masters at the terminal stations are responsible for forming the trains and allocating freight cars. En route, freight cars can be discon- nected and replaced by q,thers at the discretion of another station master. This situation leads to abuse and' disorganizes the handling of freight. 18. To provide for better utilization of the equipment and for facilities to centralize traffic information and to control costs, a modern telecommunica- tion netvwork is indispensable. A central dispatching office at Bangkok, connected by telephone to mach station of the railvay system, would control all moveraents of trains and allocations of cars. Daily records of freight movement would be available and operating efficiency would improve. e. Shops 19. The Mvlakasan RaUwlway Shops, which were largely destroyed during the viar, have now been rebuilt and equipped vith the proceeds of a Bank loan. The shops are among the best equipped in southeast Asia and are designed to take care of reQuirements tor many years to come. In addition to the Makasan Shops, where general and heavy repair wrork is done, the SRT is building two running repair sheds at Nakorn-Radjima and Thungsong for periodical overhauls. A number of depots exist at rarious places for the washing of locomotives, inspection and small repairs, - 4 - 20. The repair facilities of the SRT are adequate for its needs and to a certain extent may be considered at the present time as over-expanded. In view, howrever, of the backlog of arrears in maintenance of rolling stock and of the planned increase in equipment, it is safe to say that these facilities will be fully utilized in the near future. IV. ADIINISTRATION OF TIE SRT a. Management and Organization 21. The railwiay organization consists of 10 departments, all of which report directly to the General Manager. The principal departments are: traffic, mechanic4, civil, construction and comptroller. A personnel depart- ment does not exist. Apart from an obvious need to organize a personnel department, the departmental breakdown is satisfactory. The responsibilities of the departmkents, howrever, are not always clearly defined and coordination between them is poor. 22. Until the end of March l955 thne General Mianager -- and he alone -- was responsible for the coordination of the work of the departments. He had two Thai advisors, a technical and an administrative one, but these men had no administrative functions. It is not possible for a single man, howvever able, to act as top executive if he has no deputies and no proper statistical information to guide him and is required to spend the greater part of his time attending meetings with high government officials, members of parliament and the Railwvay Board. After the Bank had pointed out the need for delegation of authority, the SRT decided to appoint two deputies to the General !iVanager, one in charge or operations and one in charge of administration. The two deputies should relieve the General Manager from responsibilities connected 1with the daily operations of the SRT and allow him to concentrate on matters of general policy and administration. The reinforcement of the executive branch should provide for a much needed coordination among the operating departments which have in fact been functioning in isolation. 23. In early April the two advisors to the General Manager vrere promoted to the positions of deputies. Their effectiveness will depend largely on their personalities and on the degree to -mhich the General Mianager delegates his authority to them. One of their immediate tasks, in addition to coordinating and conducting daily operations, will be to organize a personnel department and a statistical and planning section. In addition to computing all relevant statistical data and preparing a daily summary of facts to be brought to the attention of management, this section should be staffed with oeople capable of analyzing deficiencies of operation, of making reconmendations, of preparing programs of improve- ments and of advising on methods of financing and execution. 24. Among the top rail-way staff are to be found competent railway men capable of doing their job wfell, given effective management and proper adminis- tration. The number of s-ach men is not large and their replacement vhen the time comes will be difficult, as the SrT has not given thought to the prepara- tion of capable men for positions at the second level who could later be promoted. -5- b. Accounting 25. Autonomy has had the happy result of making the SRT install a good accounting system based on sound commercial principles. The system used is that of the Interstate Commerce Commission in the United States. The central accounting office is well organized and consists of five divi- sions: cashier and paymaster, receipts, expenditures, general account- ing, and asset accounting. 26. The cashier and paymaster division receives all cash receipts from stations, etc., and makes all payments either through its own cash offices or by traveling cashiers. The receipts and expenditures divisions keep separate accounts, subsequently centralized in general accounting. The asset accounting division is responsible for inventory, investment, and inter-line accounts, ancilliary services accounts, i.e., hotels, buffets and restaurant cars, and balance sheet preparation. 27. The accounting proceduares have-been set up by a foreign consult- ant employed by the SRT, who is now supervising the work in the department. The department operates in a very efficient manner. c. Personnel 28. The SRT has a regular staff of some 30,000 men. This number is considered to be ninecessarily high and under better methods of operation and administration could certainly be reduced. There is no personnel de- partment to centralize hiring and separation of employees, to set up appropriate scaTes of rates, to determine the requirements for the various jobs and to take care of the welfare of the workers. Each department does its owm hiring and a man dismissed from a department may be put back on the payroll by another department which has no record of his employment. 29. Prior to the creation of the SRT all railway employees were civil servants and had the benefit of a pension based on years of service. The employees of the SRT have lost this privilege. The pension plan has been replaced by a provident fund to which the employees contribute 5% of their salary matched by an equivalent payment by the State Railways. A pension is given at the age of 60 to employees who have 10 years of uninterrupted service; the pension is only 20% of the last salary and does not depend on the number of years of service. An employee can also withdraw all the ac- cumulated amount at any time he leaves. The result is that many are tempt- ed to abandon their employment when they have accumulated enough money to try their chance in small commerce. If they do not suxcceed, they can always return to the SRT without loss of benefits. This contributes to an un- desirable turnover in personnel. 30. There exists a training school for professional workers. Train- ees have to deposit a sum of 500 bahts (r25) but very often, after having learned their trade, they abandon the deposit and take employment in private industry where they are much better paid. - 6 - 31. No steps have been taken to give incentives to workers to keep them. The basic rates are low compared to those in private indus- try and good men are hard to keep. A main reason for separating railway personnel from the civil service was to free the SRT to establish its own scale of salary rates in accordance with the labor market. The SRT has not used this freedom. It has appointed a committee to consider the question as well as that of pensions, but the committee is inactive. It is important that the SRT take early action to readjust, where necessary, the salaries to appropriate levels. It is also time for the SRT to organize a proper personnel department which would be effectively in charge of the administration of the personnel. 32. The quality of the railway worker is not bad. The Thai coolie is hardworking. Skilled labor is of good quality, but experienced mech- anics are scarce and their recruitment difficult as a result of private competition. The supervisory personnel appear to be weak. This is partly due to failure on the part of the SRT administration to instruct the super- visors in their duties and give them proper guidance. V. RAILWAY OPERATION a. Traffic 33. The railway trafflc, which hadl dropped to a low point during the war, has since then rapidly increased. Compared with the last prewar year, the volume of tra2fic developed as follows: 1941 194g 1950 12L2 1254 Goods (millions tons) 1.8 1.2 2.0 2.4 2.9 Goods (million ton-km, parcels not included) 571 300 480 556 679 Passengers (millions) 7.7 25.1 25.6 33.2 36.7 Passenger-km (millions) 423 1,307 1,436 2,254 2,348 34. The most spectacular increase has been in the number of passengers, which has risen more than 3V- times despite the shortage of carriages. This was partly due to cheap passenger fares, which have not followed the general cost of living. There has also been an increase in the average distance travelled by a passenger which partly reflects the competitive position of bus transportation over shorter distances. By far the larger number of passengers travel in third class. For every first-class passenger there are 8 second-class and 160 third-class passengers. 35. Freight traffic (exclusive of packages) consists of 40% agricul- tural products, 50% industrial products and manufactured goods and 10% petroleum and miscellaneous products. Only 20% is L.C.L. freight (less than carload loading). On the northern, northeastern and eastern ines, the freight traffic moves principally from the interior of the country to Bangkok and 40% of the cars return enpty. On the southern line the movement - 7 - is reversed and the outward-bound freight tonnage from Bangkok to the south is four times tiat of the incoming freight. A car travels an average of 60 km per day with an average load of about 5 tons. This result is quite satis- factory considering that the freight movement is not balanced in both direc- tions. A check made at Bangkok station over a period of 3 days showed that 68% of the cars that had arrived had left again on the next day and 23% on the following day. 36. The trucking of cargo to and from the stations and the loading and unloading of freight cars is done under an exclusive agreement by the Express Transportation Bureau (ETB), a freight-forwarding organization under the jurisdiction of the Ministry of Communications. The SRT has granted the ETB the exclusive franchise for the handling of freight and has provided for its agents rent-free office space at all principal stations. In exchange for these privileges, the ETB was supposed to pay to the SRT a fair share of the profits derived from its handling of this freight but has disregarded all claims for such payments since the SRT became autonomous. Because of powerfull political connections, the ETB was able to avoid entering into a firm agreement with the SRT. The Bank suggested and the Government agreed that the ETB should make fair payments to the SRT for its franchise. The Government has now decided the payment should be $2 million in 1955 and thereafter 50% of ETBts net earnings derived from railway business. 37. The following maximum speeds are in effect: 65 kim per hour (40 miles)for passenger trains, - 50 km per hour (31 miles) for freight trains equipped with pneumatic brakes - 40 km per hour (25 miles5 for all other trains. Perranent speed restrictions exist on about 8% of the total length of track; temporary restrictions are frequent due to the condition of the track. 38. According to regulations, speeds have to be reduced at stations where there is no stop, the reason '.eing that switches which are not locked are simply held in position by a laborer. In more than a hundred stations, switches are locked, but the speed restrictions have not been lifted. A simple device for locking the switch by hand would be inexpensive, could be rapidly installed and stop the practice of reducing speeds at all switches. This would result in higher comnercial speeds and in savings in fuel. 39. Another handicap in train operation is the frequent and long stops at stations. Some are necessary because of the time-consuming refueling of the wood-burning steam locomotives. However, on the diesel-operated runs, the same running times have been maintained for no justifiable reason. Other reasons which reduce the running time are the absence of freight-handling equipment at stations and the insufficient number of sidings and their short length, which delay shunting operations. 40. The train schedules make excessive allowance for possible delays. It happens frequently that a 20-minute delay is caught up on a stretch of 60 to 80 kilometers. In general, there is a tendency to reduce the running speeds and increase the duration of the stops in order to make operations easier. Thus, for passenger express trains, the average commercial speed (including stops) of the northern, northeastern and southern expresses are respectively only 32, 29 and 42 km per hour. The SRT should modify the train schedules, increase commercial speeds and run the trains on a more efficient basis. b. Maintenance 41. Maintenance of mechanical equipment is done at the Makasan central shop, at the running sheds and depots. At present, the SRT is in the process of organizing the repair work at the 14akasan shops and of setting up proper shop procedures. The shops have a total of 1800 men, of whom less than one- third are qualified maintenance men. New mechanics are difficult to recruit. Workshop procedures are not yet in effect. Because of these shortcomings, the output of the shops is below what it could be and the percentage of equipment out of service is too high. However, the quality of the work per- formed is definitely good. 42. For the maintenance of the track, the SRT uses, on the average, 1.6 men per km of track. The number of men assigned to this work is excessive and should be reduced after completion of the rehabilitation of the track and after purchase of appropriate track maintenance equipment. The SRT is experi- menting with different kinds of pneumatic hand tools. Recommendations have been made b-y7 the Bank on methods4of relaying the rails and shoveling of the ballast. co Tariffs 43. Between 1941 and 1955 freight rates have been revised three times and passenger fares siy times. Freight rates now in effect are thoseof 1952. Carload goods except livestock yieid the equivalent of 1.35 U.S. cents per ton-mile; livestock, 3.50; package freight, 3.70; and all freight together, 1.850.* These rates are based on charging what the traffic will bear, with due regard to the cost of competitive trknsDort by waterways. There exists a large number of tariff classes with progressively higher base rates for higher values of freight. Within each class, the ton-mile charge diminishes with increasing length of haul. The rates for loading and unloading the cargo and for trucking are set by ETB. * U.S. average for 1953 : 1.43 cent per ton-mile. This average rate refleats a large proportion of cheap bulk goods, such as coal, ore and building materials. - 9 - 44. The SRT's freight rates are low compared with those of railways in certain other underdeveloped countries carrying similar goods. A gen- eral increase of these rates at the present time might, however, be harmful to the Thai economy and is not envisaged by the Government. Some increase in revenue may be obtained by a revision of classifications resulting in moderate increases of rates for higher-priced cargo. 45. At the suggestion of the Bank, passenger fares were increased on February 15, 1955 by 67%. It is too early to judge of the effect of this substantial rate increase on the passenger traffic. It is reasonable to expect an immediate drop in the number of passengers, which might level out again to last yearts average over a period of 1 to 3 years. The new tariffs yield a revenue in 3d class travel corresponding to 0.8 U.S.¢ per passenger- mile. In the United States, travel by coach costs about three times more but operating conditions are totally different. The Thai railway is a meter- gauge one for which the investment cost is only about 1/3 to 1/2 of the in- vestment in a standard-gauge railway. Capital charges are, thus, low. Cheap labor and low speeds further reduce operating costs, whereas fuel in Thailand and imported materials, including spare parts, are relatively expensive. 46. The new tariffs were put in effect despite long and continuous opposition in the Government. They were needed to give the SRT additional revenues to help carry through the new investment program and are considered adequate for this purpose. A further increase should not be undertaken with- out a careful investigation of its effects as it might reduce the volume of traffic without increasing earnings appreciably. VT. _ NhIIA3ITUATTOI MTD .RECORD OF EA-INGS 47. The SRT has a good record of earnings. There has been a net profit in every year since its establishment. The following table shows the results of operation for the years 1951 (6 months), 1952, 1953, and 1954! Operating Operating Revenues Expenses Net income Year (Bahts. million) (Bahts, million) (Bahts, million) 1951 (6 months) 109 99 10 1952 347 283 64 1953 363 330 33 1954 379 333 46 The decrease in net income in 1953 &as Gue prilCipally tc a general adjustL_ent in wage rates in Thailand; 74% of the 1953 net income went to reserves. The appropriation of the net income for 1954 has not yet been made and the SRT expects that all of the net income with the approval of the Government will be carried over for the financing of the rehabilitation program. - 10 - 48. The cash position at the end of each financial year since 1951 was quite good. The following table gives the position: Cash arailable Year (Bahts, million) 1951 21 1952 15 1953 134 1954 91 49. A balance sheet as of December 31, 1954, is attached in Appendix III. It shows tB§t the SRT is in a sound financial position. A substantial reserve fund has been built up to protect the SRT against loss of earnings, ac- cidents, disasters, etc. This fund atands at %79 million. However, 048 million of this reserve has been advanced for the construction of certain new lines for which budgetary appropriations had been made. This amount therefore has to be repaid into the reserve fund by the Government. The SRT has also established an employees' provident fund to which it contributes a share equal to that of the employees. The provident fund has now reached %48 million. The SRT occasionally draws on this fund to make temporary advances to the Government for railway investments. This fund should be set up under indep- endent trustees and should be used only as they see fit, not at the will and order of SRT. 50. 'The SRT has received approximately $415 million in the form of grants from the Government from the time it was established in mid-1951 until .the end of 1954. This money was used for a variety of purposes including construction of new railway lines, construction of bridges, replacement of old or war-damajed shops, locomotives and rolling stock, and enlargement of the park of locomotives and cars. Apart from the constructin of new lines these investments were needed in the first place to replace property which had suf- fered war damage and to some extent for renewals of equipment for which a depreciation fund should have been set up at the time when the Government operated the railways as a government department. In future, current renewals of equipment and improvement of other railway facilities should be taken care of by the SRT out of its resources. 51. In summary, the SRT has always balanced its ordinary budget with- out subsidy from. the Government, has built up a substantial reserve fund, and has regularly closed the year with a surplus and a strong cash position. The SRT deserves credit for achieving these results in the comparatively short time since its finances were separated from the Government treasury. VII. FORECAST OF TRAFi'IC A,N,'D REV2NUES 52. The prospects for the economic growth of Thailpnd are discussed in the report on "Recent Economic and Financial Developments in Thailand", dated July 28 1955, It is noted there that Thailand has still substantial undeveloped production potential; and it is suggested that, despite financial difficulties, it is likely that the investment necessary to realize this - 11 - potential will be forthcoming in the years to come in an amount sufficient to allow the Thai people, who are increasing at the rate of about two per- cent a year, to improve their standard of living. This will involve in- creasing and more diversified agricultural, mining and industrial production. For this purpose an efficient transport system is essential. 53. For some time to come the railways will continue to be the back- bone of Thailandts transport system. Inland waterways are already of great importance, but only in the Central Plain, which is the main rice-producing area; even there, they are not all navigable throughout the year. Highways are only just beginning to be built up and it will be many years before they can make an important contribution to inland transport outside the metropoli- tan areas of a few large towns. The railways now provide the only important link between all regions of the country. The strengthening of that link by providing adequate equipment and better service must therefore be an import- ant factor in the economic development of Thailand. Moreover Bangkok, the hub of the railway system, is also the nationts only important seaport, through which the great bulk of the imports and exports of the country moves. The railways thus play a vital part not only in inland transport but also in foreign trade. The improvement of the railway system is thus justified and indeed is a condition for the further economic development of the country. 54. The needs of the railway system must be based on an estimate of future freight and passenger traffic and revenues. The trends in traffic movements in the past ten years have been studied and extrapolated over the next five. The resulting forecasts of traffic were analyzed by thie Bank and the estimates made are considered prudent and realistic. 55. For freight traffic the SRT was able to supply complete data on the movement of all principal items of goods. The items were grouped under main classifications of agricultural, industrial, petroleum and mineral products, government materials, packages and livestock. The forecasts were discussed with economists of the Economic Council. In Appendices V and VI are shown the freight traffic figures for 1945-54 and forecasts of tonnage and revenues for 1955-59. The following table summarizes the forecasts: Actual E s t i m a t e d 195L 1955 956 1957 28 1959 - Total tonnage (tons,thousands) 2,865 3,103 3,290 3,467 3,645 3,822 - Freight Revenues (Bahts, thousands) 182,500 198,900 209,500 219,500 229,500 239,500 56. According to this table, the estimated increase in freight tonnage averages 5.8% per year over the next five years. Percentagewise, the esti- mated increase in revenues over the same period is somewshat smaller and is only 5.3% per year. This shows that the larger increase in freight tonnage is expected to take place in goods of lower tariff categories. An increase in the rates for selected items of higher priced goods would in all probabil- ity have no appreciable effect on the transported tonnage. In the circum- stances, the SRT should continue its observation of traffic records and adjust - 12 - the rates on specific items of cargo in accordance with the conclusions derived from them. 57. With regard to passenger revenues, the basic tariffs, as previously indicated, were raised on February 15, 1955 by 67%. The effect of the tariff increase on the passenger traffic will be twofold: i) a temporary reduction in the number of passengers; ii) a transfer of passengers to lower class travel. It was assumed that, contrary to the steady increase of passenger traffic in the preceding years, the number of passenger-kilometers in 1955 would decrease by 5% compared to 1954. From then on, the average yearly increase of the past three years can be applied. On this basis, the present volume of passenger traffic would be reached again by 1958. The average revenue per kilometer and per passenger was also reduced by 5% after applying the rate increase to make allowances for a larger number of passengers using lower class transporta- tion. The following table summarizes the estimated passenger revenues over the next five years: Actual Estimated 14 2~1955 1956 1957 1958 1959 - Passenger-Kilometers (millions) 2,348 2,200 2,250 2,300 2,350 2,400 P-assenger revenues > \ & j r O 10 200 MILES -<+8 k °l 5G0 10 200 KM , 1 i l A A ES~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~...... AP-PENDIX I GENERAL STATISTICS (19,54) Area of Thailand in square kilometers 513,000 Population 19,900,000 The State Pailway of Thailand Route kilometers 3,333 Route kilometers under construction 859 Gauge 1 meter Stations 491 Steam locomotives (on the books 328 (in service 291 Diesel locomotives (on the books 44 (in service 26 Freight cars (on the books 6,210 (in service 5,052 Coaches (on the books 632 (in service 508 Commercial speeds (express trains 29 to 42 km/h (mixed trains 20 to 25 km/h Average nwuaber engine-kilometers per day (steam 100 (diesel 156 Freight tons carried (revenue freight) 2,865,000 Freight ton kilometers (parcels excluded) 679,000,000 Average length of ihaul per freight ton in km. 236 Average number freight car kilometers per day 60 Average load in t.-ns ?3er freight car Number on' oaspengers carried 36,700,000 Number of' :a sse nae r-kilomete rs 2,3h8,000,000 Average length of trip per passenger in km. 70 Average nwuber of passenger coach kilometers per day 300 Average number of passengers per coach 56 Number of employees 30,000 1R-evenues, bahts (passenger traffic 180,000,000 (freight traffic 182,500,000 (other 17,000,000 (total 379,500,000 Expenses, including fixed charges, bahts 333,000,000 Net income 46,500,000 Average revenue per passenger coach on the books, bahts 265,ooo " "f" freight car " " " " 30,000 APPENDIX I I GENERAL MANAGER TECHNICAL ADMINISTRATIVE CONSULTANT CONSULTANT TRAFFIC CHIEF CHIEF CIVIL CONSTRUCTION sTORE ADMINISTRATION COTOLE LEGA SUERITEDNT MECHNGINEER ENGINEER DEPARTMENT SUPERIN'TENDENT DEPARTMENT CN LRLGLMDCLPLC INSPECTIONS INSPECTIONS MAINTENANCE PLANNING PURCHASING ACCOUNTiNG SHOPS EB DISTRICTS DISTRICTS SOE DEPOTS (MAINTENANCE) (CQNSTRUCTION) STATE RAILWAY OF THAILAND ORGANIZATION CHART DECEMBER, 1954 STATE BlILWAYS OF THAITLAf A.PIn1 III UnauditeA Balence Sheet as at 31st Decenber, 1954 Liabilities Assets Capital S.414.149,267.92 Investment aurrent Liabilities Road and Equipment Property Road 2,593.057,054.07 Audited accounts and wages payable 36,841,803.48 Equipment 605,420,436.19 General elpenditure 6.017.208.54 3.204,494.698.80 Miscellaneous accounts payable 21,078,818.10 Aceruea Depreciation Roadl 40,875,509.22 Accrued accounts payable 16,251,628.24 Accrued ,)epreciation Equipment 70.156.S00.45 111.032.009.67 Taxes accrued 18Z.636.55 3,093,462,689.13 Total Current Liabilities 74.354.886.37 Maintenance Funds 763.646 .91 neferrea Liabilities Investment in Transportation Property less recordled Dlenreciation 3,094.226.336.04 Liabilities of provident funds 48,143.590.56 Current Assets Other deferred liabilities 4.413.583.68 Cash 28,426,165.13 Total Deferred Liabilities 52.557,174.24 Temporarj Cash Investment (Government bonis) 62,500,000.00 Unadjusted Credits Balance of 1951-1952 State budget for Other unadjusted credits 3.492.958.24 expenediture and amounts received on behalf of State Railways deposited Surplus with State Treesury 168,805,921.32 Earned surplus appropriated 79.429.480.50 Net balance receivable from agent and con.uetors 920,616.91 Earned surplus unappropriated 48.224.171.15 Miscellaneous accounts receivable 67,034,569.76 Materials and supplies 93,474,941.25 Accrued accounts receivable 1.563.228.94 Total Current Assets 422.725.443.31 peferred Assets Working fund advances 22,676,771.55 Insurance and other fundjs 48.143.590.56 Total Deferred Assets 70.820.362.11 UnaAJusted nebits Other unadjusted debits 84.435.796.96 3L622,2L7.938.42 3,6?2,207,938.42 1995 ~~~~~~~~~~~1956 1997 1959 1950 Tv%a 9,. 0.1.31, 0.9.4 TT~~~~~~~~1~~f. UU 1.8,9 ~.20.00 0.11 " 0j 92 8,00.00 .0 0,0 * jr7 -01I9j- V.tal. --1,70 37,06 17000'o',,06 -0 I,,79 Om79--- ---l76 700 2,5 601 u 00 10,6000- 007 DOD6,09 t9ool 160 334 92 35,529 .963~ 32,063.79 11,3k5 37.'167 4,0 1600 ,07 1067 - -%7.4 -, ,96D 5302 3O111 911,36 6 146,,o ,-o~01,. ,to~ 0992oo~11 0939 1,03, 0 11161 ,0 . - 10 , 39 I-A 7-4 L1. -13~9 -,4 -1,11 - 9o1 ,10, 27.I -01-00-1 6 3-08 1640 000 7.IU - - - - i47 -- -1 7,u I,o '3 *0 1'' ' A- 5 ow I 10.3 1*.60 09,1.0 2:%o 32,1.0 1210 2f,01 '.,aD11,000 - - 3,,9 go79 1,92 11,`0001 19 ,75 61,3909 9 00170 00. . ,id 8D.U MO - 1600 MD0 -,0 -36 2,0 5,7 ,00 360,0208 . -~V) I, W 1 gm - -e" 1,0 2D500 5,0 50001 y. 1..ght1160 0, - 795 37:50 8 328 .0005 37,000 - .0 ,00 -- 7,0 ,o - 0a,678 7 ISOM,672 36,676 n36,67 11 0.0.V100 MP`1106 - ,0 555- - - Uw060 290000 - - 5.000 9,000 -%h 15,00 019,00 I340 6Ooo~ 0,6500J,g7 ,, ,' ,0 190 3.150 3,02r I,17 59110.01 -t m" 300 1,579 1,01. 3,300 - 'O -54 I-O -530 66 1,060 3Oo k'O W0 1,60 82' 1600w 1'.0 20,00D 930.001ti1 di.1.g.00 a 9110 - -O -PLI - 0 I5e 1,0 1. 060010 Y-6 -o dluc 716000 - 7.000 7 2,656?, - 7,0 0,00 - I ?,ODD - -m8,7 -6 11,691. 36,63 LLS 0.010 00,111g1 - 600000 00o) - S,0W Y,000 - 5,000 19,000 30,000 2,0 I 0eo000 1o 1j 53 95 1,0 - - 3Oa -5 2-51 3,0 - -139395 100 16 101111 10061110 6,,0,, 70201111,0%W 0 0001a 1001,6 I I' 0116t0 f 10 1 b0)d1,001 3,00 2,791 - - -0 2 -O - -- - p'0101 1.0t - 66 66 -90 90 -- 9- ,9, 61112 9) 1t0.1 so 1110111110 600000- - - - -- -- .so2 1.250 112 1,70 22 26'dg. -1p101t 121 2.541 3,1.0' 5,345 IS 1,361 3,01 ,91.5r 10.1 2,561 3,.1 ,4 2 ,~ ,.4 555 1C 051 310 ,10605 12,705 17,023 920 -- - -- -~~~~~~~~~~~~~~~~~,01 w 2- ---.0 3.761 596, 1972 001t4 10,76 225~,967 S2,01.7 2080,05 11,070 036,0B9 51,013 207,872 1J,666 203,060 31,542 0 ,,.400 8,065 169,365 110,56 011,005 0,007 5n7,9',937." 115275 00100010 1,076 00,596 6,2055 26,25 -1100- 03,680 51031 2B.70 1I04 002,3065 3,1154 35,,0 04 8 16,906 114,234 0110 21 591 11,76 2066 157 91,W1.9 23,776 115,273 T.W ~~~~11,036 2489,556 36,6)0 12,1107 r2,57 56,1111 316,441 11,726 2106,246 37,996 ' A,2011 ,371 0,9 .,01 -2~L''6 52, 9 517,207 7,90 i*06,W1S 261,35,00,0 APPEND Ix V TONN.GU 01 FREIGHT TRAFJIC 1945 - 1954 CLUSSIIICATION 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 Aaricultura± groaucts: Attap 382 810 1,716 2,289 2,002 3,658 5,635 2,304 1,537 .1,460 Bamboo - - 161 104 332 532 398 317 443 1,386 Bark 318 670 484 764 1,345 2,005 1,852 1,503 2,421 3,088 B Bean 995 1,696 6,757 17,010 12,926 19,552 17,939 10,616 14,580 19,782 Bone _ 10 198 166 95 97 126 20 171 667 Bran 331 1,501 3,344 2,905 3,377 6,926 6,833 6,460 8,214 13,889 Broken rice 89 1,093 848 3.459 1,362 879 638 715 2,813 2,470 Caster seeds - - - - - - 643 443 1,883 1,758 t Coal and Charcoal 5,002 5,270 19,688 20,814 22,064 53,651 57,282 69,413 67,018 73,504 Cotton 80 390 790 1,847 719 3,367 2,873 758 1,738 2,118 Cocoa-nuts - - - - - - - - - 12,624 Pirevood 13 567 1,541 1,735 492 464 3,007 1,394 50 4,737 r ish & hish products 3,246 7,137 9,514 10,149 16,180 18,676 18,123 12,707 12,288 15,182 flour 401 956 216 435 928 1,741 1,792 1,139 574 1,142 4 Garden produce 3,514 7,961 13,176 10,940 22,920 27,362 30,779 14,976 17,064 20,674 Grass - 10 13 4,166 6,026 7,982 7,941 7,149 6,577 6,522 Hide & Horn 150 1,617 7,249 3,928 4,247 8,489 3,479 1,607 4,033 6,598 Jungle produce 260 3,580 13,428 9,393 9.750 12,248 11,138 7,995 12,707 11,086 Lard 66 524 1,021 693 994 1,692 817 135 269 566 Opium 25 75 52 93 103 202 149 177 207 113 P Paddy 10,812 118,635 84,368 116,872 149,513 187,123 153,887 125,409 109,731 85,600 p Plank 5,767 7,661 17,054 19,035 24,143 44,268 65,212 65,611 92,247 135,528 Poultry 366 48 13 36 98 562 152 141 669 6,063 Rattan 425 513 1,033 347 513 814 1,549 335 506 480 f Rice 32,141 62,917 129,138 169,954 248,284 226,062 259,973 329,030 330,283 300,176 t Rubber 1,014 9,554 15,845 26,499 35,232 35,368 36,519 35,105 26,941 27,573 t Salt 6,710 20,950 23,917 29,306 28,747 32,285 36,946 38,851 40,381 36,816 Stick-lac - - - - - - - - 11,216 Sugar-ceane 100 1,011 2,956 9,440 4,000 360 156 83 - 635 t Timber 3,372 7,258 25,378 45,557 47,762 56,414 69,282 68,978 58,068 61,314 f Tobacco 470 796 2,734 4,821 5,754 7,298 7,566 10,941 14,736 16,679 Wet tapioca refuse - - - - 23 123 339 25 152 13 Total all items 76,049 263,210 382,632 512,757 649,931 760,200 803,025 814,337 828,301 881,459 Total 12 main items marked f 73,374 251,336 350,913 473,862 616,902 714,985 760,341 788,097 791,551 806,717 Total other items (the rest) 2,675 11,874 31,719 38,895 33,029 45,215 42,684 26,240 36,750 74,742 APREND1IX v TONNAGE 0 FREIGHT TIAFTIC 1945 - 1954 (continuei) CLASSIFICATION 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 InAl-striIsl ProAucttB: Building materials 484 1,551 3,315 8,377 11,206 10,922 14,366 25,142 15,467 28,123 9 Canned gOods 303 5,908 10,904 25,023 34,857 45,136 44,653 54,901 69,814 58,814 C cement 68 622 4,014 12,304 26,110 40,521 53,900 51,283 66,066 90,632 9 Clinker _- - - 88,546 94,946 94,730 88,681 136,129 204,958 Cloth 125 357 1,153 2,140 1,580 319 225 210 189 180 Explosives - 10 25 70 47 22 205 322 163 73 Gunny bags 320 835 792 1,124 637 1,444 848 938 1,187 1,256 9 Household & Personal goods 2,270 4,938 4,953 9,334 7,129 8,053 12,374 18,860 60,083 72,858 Ice 55 143 20 557 557 788 620 707 645 66 Liquor 163 543 561 329 416 757 1,695 2,704 2,897 4,699 M Harl 40 17,091 52,763 54,920 91,877 169,301 180,991 223,599 307,325 340, Matches 66 66 464 1,923 1,643 943 549 1,230 572 477 Matting 429 733 225 247 50 59 125 62 96 20 t Metal goads & Machinery 1,620 3,199 3,075 6,475 12,489 11,992 18,000 33,971 56,599 55,486 Miscellaneous 6,403 10,017 13,767 25,888 29,006 32,125 34,838 40,821 45,858 67,529 9 Railway construction materials 448 787 5,209 21,265 23,534 47,353 57,862 119,697 78,865 115,330 Soap 1,111 4,143 601 1,238 1,351 3,410 3,290 3,018 5,783 5,798 9 Stone 23,309 47,805 46,294 56,884 140,516 197.395 145,729 72,984 224,787 59,759 9 Sugar & Molasses 4,913 8,908 8,563 15,164 21,324 17,884 19,290 23,335 45,529 45,435 V Vehicles and parts 988 3,291 9,621 14,556 17,950 22,976 28,153 20,816 20,302 20,136 Receipts from tank wagon - - 1.875 4.678 4.173 5.917 3.865 9.840 825 2.385 Tntal all Items 43.115 110.947 168.194 262.496 514.998 712.263 716.308 793.121 1.139.181 1.175.034 Total 10 items marked f 37,881 92,549 145,396 215,925 464,332 655,557 655,682 708,027 1,065,499 1,063,832 Total other items (the rest) 5,234 18,398 22,798 46,571 50,666 56,706 60,626 85,094 73,682 111,202 -P.tri a,,. ProAucts: Benzine 191 1,707 5,432 14,410 25,567 33,823 39,867 47,915 53,634 63,866 Kerosene 119 1,071 6,895 11,539 20,517 27,144 29,667 30,153 33,717 36,468 Other oil 1,325 1,621 1,585 2,441 9,517 26,172 40,083 38,686 44,978 71,561 1,635 4,399 13,912 28,390 55,601 87,139 109,617 116,754 132,329 171,895 Mineral Producte: Tin and other ores 917 1,059 1,361 1,759 6,192 6,235 7,895 4,156 7,492 12,389 Government materials: Dept.of Ways construction material 585 1,747 7,892 6,830 6,987 11,141 13,5?8 14,792 23,838 20,012 Packages 107,567 225,287 274,359 371,020 425,602 472,726 611,691 663,526 591,687 580,788 Livestock 2,278 4,056 9,258 17,408 18,679 19,580 21,569 21,705 22,650 23,695 Total Freight Tonnage 232,146 610,813 857,735 1,201,048 1,678,554 2,070,094 2,284,914 2,430,573 2,745,478 2,865,272 Revenue of Freight (Baht) 6,034,236 18,913,812 37,726,178 48,570,683 57,459,848 62,532,440 76,808,138 174,609,878 181,121,878 182,503,310 APPENDIX VI SUMMARY OF FORECAST ON FREIGHT REVENUES 1955 Baht Car Load 2,460,000 tons 131,905,200 Packages 615,000 55,h36,100 Livestock 28,4hoo 5,602,468 Freight Incidental Charges 6,000,000 Total 198,,943L,768 1956 Car Load 2,640,000 tons 141,556,800 Packages 620,000 t1 55,886,800 Livestock 30,600 " 6,036,462 Freight Incidental Charges 6,000,00Q Total 209,h80,062 1957 Car Load 2,R10,000 tons 150,672,200 Packages 625,000 " 56,337,500 Livestockl 32,700 " 6,450,729 Freight Ine_`einta Charges 6,000,000 Total 219,460,429 1958 Car Load 2,980,000 tons 159,787,600 Packages 630,000 " 56,788,200 Livestock 34,860 " 6,876,832 Freight Incidental Charges 6,ooo,ooo Total 229,452,632 1959 Car Load 3,150,000 tons 168,903,000 Packages 635,000 1t 57,238,900 Live estock 37,000 " 7,298,990 Freight Incidental Charges 6,000,000 Total 239,440,890 Total for 5 years 1,096,777,781 S$L!34IT OF DS!ST l IlOOtI ACCOUNTS MD 01 ATALA A1ID HI=MD JWS lHOR INVESIMN!T BMDGEl9 2T 1960o (millions of Bahts) L" Income Account Revenues* a) Passenger traffic 226 244 253 263 270 270 Freight traffic 192 201 213 25 235 235 Other 14 14 16 17 19 19 Total 432 459 482 505 524 5ZI4 XPenditures: Operating expenditures including fixed charges 358 374 383 391 398 3g8 Capital charges on new investment 1 4 2 9 9 9 Total 359 378 392 400 407 407 NelVincome 73 81 90 105 117 117 1I. unsA Available for Investmant BuMaet SET resources: Net income 73 81 90 105 117 117 Depreciation charges 42 51 58 59 59 59 Bank loan withdrawals 120 98 34 - _ _ Government grants 82 93 87 88 Provident fund withdrawal - - 26 11 - - Total 317 323 295 263 176 176 MII. Iunds Recuired for Investment Budget Expenditures on investments 317 317 284 233 117 - Bank loan service - 6 11 30 30 30 Provident fund loan service - - - 29 12 Total 317 323 295 263 176 42 IV. Surplus 0 0 0 0 0 134 a) Estimated revenues supplied by the SET are somewhat lower than those resulting from the forecasts of traffic containeA in the report, b Revenuts and expenAitures in 1960 have been assumed to be the tame as in 1959. APrENDIX VIII (a) STATE,ZEINT OF SRT C0b2.5INTL1S AS OF N0VELIBER 30, 1954 Bahts 1. 1954 Investment Program -- from Railrays' Earning 55,084,968.00 2. 1953 Investment Program -- from State budget 56,062,177.00 3. 1952 investment Program -- from Reserve for Extensions 24.,352,763.83 4. 1953 Investment Program -- from Reserve for Extensions 12,836,930.77 5. Makasan Workshop -- Construction 26,772,423.17 -- Machinery 5,545,580.92 6. Part of Addition & Betterment to be spent from 1952 budget 250,276.89 7. Extension of Surat Yard 1,500,000.00 8. Construction of Thai-Cambodian line 3,017,058.40 9. Construction of Me Klong line 9,377,050.00 10. Construction of Udorn-Nong Kai line 6,646,810.26 11. Payment on 27 Davrenport Diesel locomotives 2,800,000.00 12. 18 Baldwin Steam locomotives 4,245,736.27 13. Materials and supplies 3,144,845.6o 14. Provision for Sulzer DieiL locomotives 152,650.35 15. Rails & steel bridges ordered from, Japan 4,082,476.91 16. Rama VI Ban Dara and Surat bridges 3,509,855.99 17. 'Wheels & axles 13,700,660.00 Total 233,082,264.36 APPENDIX VIII A. Liquid assets (excluding accounts receivable) as of November 30, 1954 1. Cash 4.,224,07l. 39 2. Deposit at Bank of Thailand 23,885,189.30 3. Remittances in transit 3,461,828.95 4. Government bonds 62,500,000.00 5. Amount deposited writh Treasury 168,542,590.66 6. Balances receivable from agents 1,311,673.24 Total 263,925,356.S54 Less B. Current Liabilities 1. Audited accounts & vwages payable 32,356,133.09 2. MIiscellaneous accounts payable 19,327,576.93 3. Accrued accounts payable 1,89B,331.27 4. Taxes accrued 169,560.10 Deferred Liabilities 5. Guarantee deposit 3,830,707.89 Unadjusted Credit 6. Amount received in advance for construction of lines, roads, sidings, and others from other Government deposits & outsiders 1,619P442.31 Total 59,201,751.89 C. Balance of Liquid Assets Available 204,723604!65 Less D. Commitments & Obligated Funds 233,082? 26.36 E. Balance being cash deficit of commitmnents and obligated funds over cash available 28,358,659.71