The World Bank Report No: ISR15171 Implementation Status & Results Azerbaijan RAIL TRADE AND TRANSPORT FACILITATION (P083108) Public Disclosure Copy Operation Name: RAIL TRADE AND TRANSPORT FACILITATION (P083108) Project Stage: Implementation Seq.No: 15 Status: ARCHIVED Archive Date: 24-Jun-2014 Country: Azerbaijan Approval FY: 2008 Product Line: IBRD/IDA Region: EUROPE AND CENTRAL ASIA Lending Instrument: Specific Investment Loan Implementing Agency(ies): ADY (Azerbaijan Railways JSC) Key Dates Board Approval Date 27-Mar-2008 Original Closing Date 30-Jun-2012 Planned Mid Term Review Date 30-Jun-2010 Last Archived ISR Date 30-Dec-2013 Effectiveness Date 15-Mar-2010 Revised Closing Date 31-Dec-2017 Actual Mid Term Review Date 10-Dec-2012 Project Development Objectives Project Development Objective (from Project Appraisal Document) The main project objective is to improve railway services in Azerbaijan, as well as the competitiveness, financial sustainability, operating and cost efficiency, and capacity of the Azerbaijan Railways (ADDY) in particular along the transport corridor toward Georgia (east-west corridor). The project will support the implementation of the first phase of the Government Program covering components, which are most time-sensitive and will most rapidly lead to cash flow generation. The project will focus on: (i) maintaining and growing the railway business (increase revenue from US$219 million today to about US$283 million by 2015) by providing the profitable freight market segment with proper service, infrastructure and locomotive capacity; (ii) transforming the Azeri Railways into a financially self-sustainable operation in freight transportation, covering all its costs (including infrastructure maintenance and traction) from revenues, while improving its operational efficiency; and (iii) improving the transparency of the Railway sector by introducing International Financial Reporting Standards (IFRS) and profit centers (passenger/freight) and by separating on an accounting basis passenger service that could be self-sustained from others. Other parts of the Government Program are expected to be covered through separate projects once the proper financial and technical due diligence has been completed. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Component(s) Component Name Component Cost Public Disclosure Copy Rehabilitation of Eeast-West railway corridor 927.70 Locomotives 334.00 Modernization 27.00 Project Implementation 7.60 Overall Ratings Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Page 1 of 7 The World Bank Report No: ISR15171 Previous Rating Current Rating Overall Risk Rating Moderate Moderate Public Disclosure Copy Implementation Status Overview The project implementation is progressing satisfactorily with most of planned procurement activities completed. The power conversion works are advancing with construction of four AC traction power substations finalized at Ganja-Boyuk Kesik section (136 km) and Azerbaijan Railways are prepared to start with catenary and poles replacement in July 2014. The signaling contractor has prepared the conceptual design and finished the ground research works for new cabling alignment. The signaling works are to be launched in July 2014 once the detailed design is reviewed by the Bank and approved by the Government. The progress with power conversion and signaling upgrade is accompanied by 320 km of rehabilitated rail track. On May 12, 2014 the Government has signed the contract for the supply of 50 new AC freight locomotives. The progress with Reform of the Railway Administration continues to be satisfactory. Locations Country First Administrative Division Location Planned Actual Azerbaijan Samux Rayonu Zazaly Azerbaijan Yevlax City Yevlax Azerbaijan Yevlax Rayonu Yevlax Rayonu Azerbaijan Yevlax Rayonu Yevlax Rayonu Azerbaijan Ucar Rayonu Ucar Rayonu Azerbaijan Ucar Rayonu Ucar Azerbaijan Tovuz Rayonu Tovuz Azerbaijan Tovuz Rayonu Tovuz Rayonu Azerbaijan Kyurdamirskiy Rayon Sygyrly Azerbaijan Shamkhorskiy Rayon Shamkhorskiy Rayon Azerbaijan Haciqabul Rayonu Qarasu Public Disclosure Copy Azerbaijan Agstafa Rayonu Poylu Azerbaijan Haciqabul Rayonu Navagi Azerbaijan Ucar Rayonu Myusyuslyu Azerbaijan Kyurdamirskiy Rayon Kyurdamirskiy Rayon Azerbaijan Kyurdamirskiy Rayon Kyurdamirskiy Rayon Azerbaijan Kyurdamirskiy Rayon Kyurdarmir Page 2 of 7 The World Bank Report No: ISR15171 Country First Administrative Division Location Planned Actual Azerbaijan Tovuz Rayonu Qovlar Public Disclosure Copy Azerbaijan Xanlar Rayonu Xanlar Rayonu Azerbaijan Kyurdamirskiy Rayon Karrar Azerbaijan Goranboy Rayonu Goranboy Rayonu Azerbaijan Goycay Rayonu Goycay Rayonu Azerbaijan Ganca Sahari Kirowabad Azerbaijan Shamkhorskiy Rayon Star Agozam Azerbaijan Baku Baladzhary Azerbaijan Baku Baku Azerbaijan Agstafa Rayonu Agstafa Azerbaijan Agdas Rayonu Agdas Rayonu Azerbaijan Goranboy Rayonu Goran Azerbaijan Haciqabul Rayonu Mugan Azerbaijan Haciqabul Rayonu Padarqislaq Azerbaijan Agstafa Rayonu Salahli Azerbaijan Haciqabul Rayonu Pirsaat Azerbaijan Agstafa Rayonu Agstafa Rayonu Azerbaijan Agstafa Rayonu Agstafa Rayonu Public Disclosure Copy Azerbaijan Ganca Sahari Ganca Sahari Azerbaijan Ganca Sahari Ganca Sahari Azerbaijan Samux Rayonu Samux Rayonu Azerbaijan Yevlax City Yevlax Sahari Azerbaijan Haciqabul Rayonu Haciqabul Rayonu Azerbaijan Haciqabul Rayonu Haciqabul Rayonu Azerbaijan Baku Eibat Page 3 of 7 The World Bank Report No: ISR15171 Results Project Development Objective Indicators Public Disclosure Copy Indicator Name Core Unit of Measure Baseline Current End Target Client Satisfaction survey for freight services Text Value 100 113.7 125 (index 100-2009). Date 30-Jun-2009 04-Jun-2014 31-Dec-2017 Comments This is actual data based on results of 2013 survey. Volume of transport (million tons) - oil and oil Text Value 13,2 9.7 20.5 products on east-west corridor Date 31-Dec-2007 04-Jun-2014 31-Dec-2017 Comments This is 2013 actual data. Volume of transport (million tons) - east-west Text Value 28.2 21.7 25 corridor Date 31-Dec-2007 04-Jun-2014 31-Dec-2017 Comments This is 2013 actual data. Operational cash flow/revenues Text Value 13% 10% 10% Date 31-Dec-2007 05-Jun-2014 31-Jan-2017 Comments This value is indicative, as the 2012 entity audit has not been completed yet. ADDY working ratio (Operating expenses Text Value 75% 74% 87% (excluding depreciation) divided by total Date 31-Dec-2007 04-Jun-2014 31-Dec-2017 revenues. Based on IFRS reports) Comments This value is indicative, as the 2012 entity audit has not been completed yet. Net ton-km per locomotive used on E-W line (in Text Value 117.1 110 150 million per year) Date 31-Dec-2007 04-Jun-2014 31-Dec-2017 Comments This is 2013 actual data. Train transit time E-W (new locos) Text Value 22 hours 23 hours 12 hours Public Disclosure Copy Date 31-Dec-2007 04-Jun-2014 31-Dec-2017 Comments This is 2013 actual data. % reduction in operating cost/net ton-km (Real Text Value 0% -40% 2.5% basis, compared to 2007). Date 31-Dec-2007 04-Jun-2014 31-Dec-2017 Comments This value is indicative, as the 2012 entity audit has not been completed yet. % increase in operating revenues/net ton-km Text Value 0% 21% 5% Page 4 of 7 The World Bank Report No: ISR15171 Date 31-Dec-2007 04-Jun-2014 31-Dec-2017 Comments This value is indicative, as the 2012 entity audit has not been Public Disclosure Copy completed yet. Electric consumption per transport unit (KWh Text Value 180 207 170 per 10 000 ton or passenger-km) Date 31-Dec-2007 04-Jun-2014 31-Dec-2017 Comments This is 2013 actual data. Locomotive availability (Percentage of fleet Text Value 45% 60% 80% available for service as measured in hours Date 31-Dec-2007 04-Jun-2014 31-Dec-2017 (currently 110 out of 224 available fleet) Comments This is 2013 actual data. Intermediate Results Indicators Indicator Name Core Unit of Measure Baseline Current End Target Percentage of track in critical condition on east Text Value 61% 55% 10 west corridor as measured through condition Date 31-Dec-2007 04-Jun-2014 31-Dec-2017 surveys - Track with speed restriction. Comments This is actual data based on progress with track renewal (320 km renewed to date). Percentage of track in critical condition on east Text Value 35% 20% 20 west corridor as measured through condition Date 31-Dec-2007 04-Jun-2014 31-Dec-2017 surveys - Track in need of renewal. Comments This is actual data based on progress with track renewal (320 km renewed to date). Number of locomotives able to cross Text Value 0 0 30 Azerbaijan reliably (Number of locomotives Date 31-Dec-2007 04-Jun-2014 31-Dec-2017 able to cross 502 km (i.e. E-W corridor) non- Comments stop) Locomotive reliability (Mean distance in Text Value 17000 14550 100000 Public Disclosure Copy kilometers between operational failures) Date 31-Dec-2007 04-Jun-2014 31-Dec-2017 Comments This is 2013 actual data. Follow up of audit qualifications (annual) Text Value no audit or follow up in 2007 On-going audit and follow up each year Date 31-Dec-2007 04-Jun-2014 31-Dec-2017 Comments The 2011 entity audit is done while 2012 is under completion and 2013 entity under preparation. Page 5 of 7 The World Bank Report No: ISR15171 Modernization of Railway Company Text Value ADDY is a state owned On-going IFRS based computerised department accounting system is operational Public Disclosure Copy Date 31-Dec-2007 04-Jun-2014 31-Dec-2017 Comments IFRS based asset revaluation and entity's first audit are done Data on Financial Performance (as of 20-May-2014) Financial Agreement(s) Key Dates Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P083108 IBRD-75090 Effective 27-Mar-2008 18-Dec-2009 15-Mar-2010 30-Jun-2012 31-Dec-2017 P083108 IBRD-82820 Effective 27-Jun-2013 20-Sep-2013 03-Dec-2013 31-Dec-2017 31-Dec-2017 Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P083108 IBRD-75090 Effective USD 450.00 450.00 0.00 174.40 275.60 39.00 P083108 IBRD-82820 Effective USD 220.00 220.00 0.00 0.55 219.45 0.00 Disbursement Graph Public Disclosure Copy Page 6 of 7 The World Bank Report No: ISR15171 Key Decisions Regarding Implementation On May 12, 2014 the Government has signed a contract for the supply of 50 new AC freight locomotives. Public Disclosure Copy Restructuring History CD Decision on 03-Dec-2009 Related Projects P146125-Rail Trade and Transport Facilitation AF Public Disclosure Copy Page 7 of 7